Tag - Agriculture

Do you own gold and silver?

Do you have investments in the stock market that give you the potential to profit from higher priced oil, natural gas and coal?

What about agriculture: do you have access to the inevitable sustained interest that people seem to have in eating food?

I hope you do. If you don't, it looks like you'll have an opportunity to buy some of these assets at sale prices during this broad-market down turn.

In the United States, pork might be "the other white meat," but in China, it's the only meat. Well, almost.

Far more than any other meat, pork occupies a special place in the Chinese diet and economy. Supporting a hog market estimated to be worth $32 billion annually, the Chinese consume more pork than any other nation. It is prepared in almost every conceivable way, from roasted whole suckling pigs, commonly served during holiday feasts, to sweet and sour pork, whose Americanized version is a Chinese restaurant staple. Pork accounts for two-thirds of the average Chinese's protein intake.

Last year, spiraling pork prices amid shortages tied to severe weather in southern China and an outbreak of "blue ear" disease — a form of swine flu that decimated up to 2 million pigs — left Chinese shoppers suffering from the same sticker shock as Americans filling up at the pump these days. Today, pork prices continue to rise as producers who are feeling the pinch of pricey feed and fuel pass along costs. As of this April, pork prices in China had increased a further 68% from the same time last year.

The vast majority of China's annual population of between 500 and 600 million hogs is raised on small farms. And with the nation's appetite for pork and pork products growing with consumers’ prosperity, producers are unable to meet demand. To fill the supply gap, China has sealed importation deals with U.S. pork and meat processing giant Smithfield Foods Inc. (NYSE:SFD) and its rival Tyson Foods (NYSE:TSN) to put American pork on Chinese tables.

Despite surging expenses that are plaguing companies in the sector, AgFeed Industries Inc. (Nasdaq:FEED), a leading pork producer and livestock feed grain maker, is setting the stage to bring home the bacon in the fast-growing market. AgFeed develops, manufactures, distributes and sells pre-mix feed and feed additives primarily for use in China's pork husbandry and slaughter market. It is also engaged in the raising, breeding and sale of hogs for the domestic pork production and hog-breeding markets. The company, which does business through a handful of subsidiaries, has production plants in Shanghai, Nanchang and Nanning, . . .

AgFeed Industries Inc. (Nasdaq:FEED) announced Wednesday it is expecting favorable second-quarter earnings. The China-based commercial hog producer and premix feed company said it sold a record number of hogs for the quarter ended June 30. The company also said lower production costs due to better operating efficiency helped expand profit margins for the quarter.

Ahead of the bell Wednesday, AgFeed was mostly flat, trading at $13.93, up $0.04 from Tuesday’s close.

The Andersons, Inc. (Nasdaq:ANDE) shares were up 15% in pre-market trading after the company raised its guidance late Thursday for fiscal year 2008 to a gain between $4.40 per share and $4.80 per share. Previous estimates were between $3.65 and $4 per share. The Maumee, Ohio-based agriculture and transportation company said it raised the guidance outlook based on a solid first half of the year. Ahead of the bell Friday, shares were at $37.98, up $5.05 from Thursday’s close.

Grain prices are soaring and farmers, in turn, are investing more in seed, fertilizer, pesticides and equipment, which plays nicely into the hands of American Vanguard Corporation (NYSE:AVD) and KMG Chemicals (Nasdaq:KMGB), two companies that will likely report strong double-digit earnings growth this year. 

Fertilizer spending rose 20%, or $14 billion, last year and is forecast to rise another 18%, or $3 billion, this year. Spending on crop pesticides is forecast to increase 11%, or $1 billion, this year.

Rising demand from India and China, low grain stockpiles and the increased use of grain for ethanol and other biofuels have fueled huge increases in grain prices. A flood of new investors have entered the agriculture commodity markets in search of high returns and total index fund investments in corn, soybeans, wheat, cattle and hogs are up nearly five-fold to $47 billion today, from $10 billion in 2006.

Good news for American Vanguard Corporation, a developer of crop protection products, turf products and insecticides. The company has grown by acquiring niche products from larger companies such as BASF, The Dow Chemical Company (NYSE:DOW), Bayer and DuPont that divest some of their mature products to focus more resources on newly discovered molecules. Through this strategy, American Vanguard has acquired 13 new products since 2000 and produced 20% annual income growth over the last five years. In 2006, American Vanguard launched a new corn herbicide, Impact, which it believes will become a top five product in this . . .

Lindsay Corporation (NYSE:LNN)
Omaha, Neb.
http://www.lindsaymanufacturing.com

52-week low / high: $29.78/$131.14
Shares Outstanding: 11.92 million
Market Capitalization: $1.21 billion

Who knew that crop irrigation and traffic flow could be such a fateful match? Lindsay Corporation (NYSE:LNN) has successfully melded the two segments under its umbrella of self-propelled center pivots and crash cushions, proving that a love affair between apples and oranges can exist under the right conditions.

Lindsay manufactures the joints of the irrigation industry – in the form of lateral move irrigation systems and self-propelled center pivots, both used to stabilize crop production while preserving water, energy and labor. These products are marketed domestically and internationally under its Zimmatic brand. Lindsay also makes separate lines of center pivot and lateral move irrigation equipment for use on smaller fields under its Greenfield and Stettyn brands, and hose reel travelers under the Perrot brand.

If that’s not enough to get you thinking of “greener” pastures, the company also produces irrigation controls, mini-pivots, hose reel travelers, and chemical injection systems and remote monitoring and control systems, which include remote telemetry and a Web or personal-computer-hosted data acquisition and monitoring application.

For investors wanting to plant a more industrial seed in their portfolios, Lindsay dabbles in not only irrigation, but also infrastructure. This segment produces and markets large diameter steel tubing, movable barriers for traffic lane management, and crash cushions (used at toll booths, freeway off-ramps, medians and roadside barrier ends, bridge supports, utility poles, reflective pavement tapes and other road safety devices). The company also provides outsourced manufacturing and production services to other businesses.

Lindsay’s recent results are a resounding green light to financial success. Buckle your seatbelts, profits ahead: net income for the three months ended Feb. 29, 2008 jumped a whopping 288% to $9.7 million, or $0.79 per share, from $2.5 million, or $0.21 per share. Lindsay's gross margin improved to 27.7% from 22.7% a year ago, while revenue soared more than 70% to $108.4 million. The company’s EPS of $0.79 beat the consensus by 132%. Quarterly results included revenue from recently acquired businesses Watertronics Inc. (a leader in water pumping stations and controls for the golf, landscape and municipal markets) and Snoline SpA.

"Demand for irrigation equipment is strong globally, supported by higher commodity prices, biofuel expansion and water initiatives," says Rick Parod, Lindsay's president and chief executive officer. "Infrastructure segment demand for the unique solutions provided by our products is also strong, and we continued to realize synergies from the acquisitions in this segment during the period."

With Lindsay’s segments flirting with robust demand for irrigation products in 2008 both domestically and internationally, and consistent growth of roads and highways, the pair sound like a match made in investor heaven.

For more information on the company, read Lindsay Corporation: The rainmaker.

Note: Lindsay Corporation (NYSE:LNN) is on the "Watch List" of Growth Report, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Lindsay displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Growth Report portfolio at a later date.

Origin Agritech Ltd. (Nasdaq: SEED) reported this morning that the Ministry of Agriculture in China has approved two new corn hybrid varieties of its product line for nationwide distribution during the next sales season.

The Beijing-based small cap said the approval, which includes two new corn seed products known as Lin Ao 9 and Ao Yu 28, will extend its geographic reach throughout China. Since both products were given nationwide approval, they may be sold into any regions of China, according to Origin.

“We did have the reach before, excluding Taiwan and Hong Kong, but this helps us gain more seed coverage,” said Irving Kau, vice president of Finance at Origin.

Origin currently has 4.8% of the corn seed market, according to Kau, which is estimated to be a $1 billion market. According to Eddie Cheung, head of investor relations for Origin, the company sells in 30 of the 32 provinces in China.

With today’s approval, the company now has over 55 total corn hybrids approved for sale into the marketplace next year.

Revenues from corn products comprised roughly 75% of total revenues in 2007, and are expected to continue to be the main revenue driver going forward, according to the company.

“Their geographic reach is pretty expansive within the country,” said Cheung. “In terms of market share, the corn seed market in China is really fragmented, so there’s really not a dominant player with a majority market share. [But] I think having a broader portfolio product mix should help capture market share for the company.” 

www.titanmachinery.com
Nasdaq: TITN
Priced Dec. 5, 2007
$51.0 million proceeds
$99.2 million post-money valuation

It’s too late for the IPO; the deal was priced in December. That was back when IPOs could get priced. Given the paucity of offerings in the current market, it seems like a good time to look at what companies have been able to go public, and Titan Machinery has the honor of being the top IPO in terms of aftermarket performance in the last six months. The stock has more than doubled since the deal closed on Dec. 5 and now has a market capitalization of $258 million.

This high flier operates in a grounded industry. It’s a chain of farm-equipment dealerships headquartered in Fargo, N.D. Titan represents agricultural and construction machinery made by CNH Global (NYSE: CNH), sold under the Case and New Holland brands. Its 39 stores are in North Dakota, South Dakota, Minnesota and Iowa. Hence, most investors could go through life without ever seeing one of Titan’s operations. The company’s customers, however, have come to see it as a reliable source for the parts and equipment they need to keep their own businesses operating.

Because demand for its lines is more or less fixed, Titan’s plan is to grow through acquisition. Most of its competitors are small, operating only one or two stores, and in some cases, the owners are interested in retiring and don’t have family members who want to take over. Since the IPO, Titan acquired Ceres Equipment, a Case-New Holland dealer in Roseau, Minn., that should add $11 million in revenue. Once a business is acquired, Titan can grow profits by standardizing processes, getting volume discounts on its inventory, and advertising more efficiently.

Agria Corp. (NYSE: GRO) shares are rising after the provider of agriculture products announced that it projects fourth-quarter revenue in the higher end of its guidance.

The China-based company expects quarterly revenue in the range of $31.8 million to $33.8 million, which would represent a growth of 60% to 70% over last year’s fourth quarter. Agria said strong corn seed sales fueled growth and that snow storms did not cause a material boost in sheep deaths.

"We are pleased with the success in our business and continue to expect we will achieve annual revenue growth above 25% in 2008 compared to 2007 based on current order forecasts and market expectations,” co-CEO Kenneth Huang said in a statement. “The opportunities in front of us for revenue and profit growth remain vast.”

In morning trading, GRO shares are up 12.40%, or $0.94, at $8.52. Over the last 52 weeks, shares have ranged from $6.05 to $17.